Shaukat Aziz says economy to cross $100 billion next month!!

[MohammedA]

Jang.com.pk

says economy to cross $100 billion next month

By our correspondent

KARACHI: The Federal Finance Minister, Senator Shaukat Aziz said on Wednesday that the size of the national economy would cross the $100 billion mark by the end of June 2004.

While addressing a well attended meeting of the main investors of the stock exchanges and top bankers of the country at the trading hall of the Karachi Stock Exchange he said:

"Now we have confirmed figures that this year the GDP growth rate would exceed 6.5 per cent".

He said the 6.5 per cent GDP growth rate is the highest in the region and by the Grace of God we would achieve around 8 per cent GDP growth rate during the next 3 years. While praising the performance of the KSE he said that the per capita income has also increased to $600 too.

"The detailed review of the per capita income would be released in the forthcoming budget documents," he said

This was the 11’th visit of the finance minister to the KSE since his assumption of the office of finance minister.

Shaukat said that Pakistan has been rated as the best issuer of international capital bond after the successful launch of the Euro bond.

He said by the end of December 2004, we would quit from the poverty reduction and growth programme of the International Monetary Fund (IMF).

He said: "In fact last month I told the Managing Director of the IMF that we are leaving the IMF. Pakistan would be the first country which would be quitting from the PRGP Programme in the entire history of the IMF."

By launching the Euro Bond we gave a message that we have reached such levels that we could raise the required capital from the international capital markets, he said.

He said the coming federal budget we would be focussing on such FDIs that would rise investments in export oriented industries like that of the Far Eastern countries.

However, he said the level of FDI would be crossing the levels of $1 billion this year.

The CBR would scrap many unwanted things in the budget, like the submission of returns or forms which has been outdated and in this regard he particularly mentioned submission of form "S" by manufacturing industries of the country to the tax authorities.

He expressed the hope that with the start of the National Commodity Exchange, the agriculture sector would get the requisite boost and with the passage of time, the numbers of commodities, to be traded on this exchange would be enhanced and one day it might be rated alongside the Chicago Commodity exchange of the US.

To ensure the availability of wheat during the next season ‘we would import 1 million tones of wheat,’ he said

Quashing ‘gossips’ with regard to the WTO he said in January 2005 the only thing, which will happen, would be scrapping of the textile quotas. Earlier, Chairman KSE Arif Habib presented the pre-budget proposals of the KSE and the managing director of the KSE; Moin Fudda presented the performance KSE’s performance.

[MohammedA]

I never believed Pakistan only had $70bn GDP. Anyone who visits the cities will know that can't be true. I think some new industries have been included in the calculations (dunno if telecom, power, arms exports and other large-growth hi-tech industries have been included too - someone find out?). Also the base year has been change from 1980 to the 21st century. India has a base year of 1994 or something like that.

The undocumented economy in Pak must be huge, probably similar size to the documented economy. Any comments from economists out there on significance of this change in GDP or at least change in GDP calculations? Plus, is he talking of GNP too?

[H Khan]

Plus, there is the "underground economy" which is worth another $100 billion.

[MohammedA]

Another thing, is that it's vital for FDI & image purposes that accurate and honest stats are kept on the size of the economy & growth figs. This will make the country more attractive to local & foerign investors. Only problem is the image in media, and politics!

[Sultan]

Whats really odd is that the cia world fact book states that Pakistans GDP for 2002 was $295 billion and with a GDP per capita of $2000.

Could they be taking into account the undocumented economy as well??

[Ahmed M]

What is base year?

[Behjat]

Quote: Originally Posted by H Khan Plus, there is the "underground economy" which is worth another $100 billion.

Salaam,

HKhan, your pillows and mattress must be thick ...

[MohammedA]

Quote: What is base year?

OK, it's been a long time since I studied statistics and economics/corporate finance, but here's the definition from the UK govt: Don't understand why GOP stuck to using 1980 as a base year for so long! Bankers & ther professionals will look at these figs among other stats & factors. In the next budget, Shaukat must go for measures to generate employment for the masses and help the middle-classes develop.


http://www.hm-treasury.gov.uk/econom...gdp_backgd.cfm

The base year and the reference year
ONS currently uses 2000 as the base year for GDP (ie GDP at constant prices). This means that the individual components of GDP that are aggregated together are done so using the prices relating to 2000. It is often helpful to change the reference year so that another point is referenced as 100. For the purposes of the GDP deflator series prices are shown relating to the last full financial year. For further information on the reference year and index numbers see Annex A: How to use the GDP deflator series: Practical examples, changing the reference yea

[Aziz]

Sultan your figure of $2000 per capita income is a different calculation. In truth it's probably the more reliable is assessing peoples income.

Pakistans per capita income has been around $450 for many years - but your figure (called the purchasing power) is around $2000 - i.e. that is the value of goods that could be bought by the average person in that country.

The $600 figure as it now can be volatile due to fluctuating exchange rates.

I read a report last year which stated that Pakistan had an unofficial GDP of circa $200Bn.

Aziz

[Boota]

Quote: Originally Posted by Sultan Whats really odd is that the cia world fact book states that Pakistans GDP for 2002 was $295 billion and with a GDP per capita of $2000. Could they be taking into account the undocumented economy as well??

Thats based on purchasing power parity basis

[ROMMEL]

Quote: Originally Posted by Sultan Whats really odd is that the cia world fact book states that Pakistans GDP for 2002 was $295 billion and with a GDP per capita of $2000. Could they be taking into account the undocumented economy as well??

This is purchasing power parity. This means that what a person in pakistan earns in a year. From that money he can by essentials that will cost $2,000 if the same were bought in the US.

Cheers,

[Sultan]

Cheers guys for the explanation... but as Aziz has highlighted the reliability of the PPP based calculation are there any real reasons as to why the Pak Treasury doesnt use the PPP calculation when producing GDP figures??? As I stated earlier progressing a state's status on the intl forum centers around positive image projection and management. Im sure a fig of $2000 GDP per capita (placing Pakistan in the low middle income group) would attract a lot more interest than a paltry sum of $450.

[Manavian]

From CIA World Factbook :

GDP - Per Capita : This entry shows GDP on a purchasing power parity basis divided by population as of 1 July for the same year.

I checked out the info for a few nearby countries :

PAKISTAN
GDP = $295.3 billion (2002 est.)
GDP per capita = $2,000 (FY01/02 est.)

INDIA
GDP = $2.664 trillion (2002 est.)
GDP per capita = $2,600 (2002 est.)

CHINA
GDP = $5.989 trillion (2002 est.)
GDP per capita = $4,700 (2002 est.)

BANGLADESH
GDP = $238.2 billion (2002 est.)
GDP per capita = $1,800 (2002 est.)

[Manavian]

Following up on my research on PPP GDP numbers, I checked out the World Bank site, and the numbers are greatly lower for the same 4 countries PPP numbers (above post).

http://www.worldbank.org/data/countr...untrydata.html

PAKISTAN
GDP = $59.1 billion
GDP per capita = $420

INDIA
GDP = $510.2 billion
GDP per capita = $470

CHINA
GDP = $1.3 trillion
GDP per capita = $960

BANGLADESH
GDP = $47.6 billion
GDP per capita = $380

I guess that the PPP number shows the standard of living, since the cost of basic necessities is lower in 3rd World countries, and the PPP number accounts for the lower costs. Whereas the World Bank is interested in the absolute size of the economy, since any import/export has to be paid for in hard currency. PPP or absolute $ : which is the better estimate of economic size....probably a matter of what usage you want the data for.

[JameelY]

I would not trust the CIA to tell the time of day, let alone economic statistics.

How's that for a "slam dunk"?

[Aziz]

Manavian the world bank statistics aren't PPP they are the actual (foreign currency) calculations.

Aziz

[Manavian]

Quote: Originally Posted by Manavian Whereas the World Bank is interested in the absolute size of the economy, since any import/export has to be paid for in hard currency.

Aziz,

That's what I meant to say in my previous post. The PPP numbers are much larger. The actual $$$ is what the international agencies are interested in.